Are CDs Really a Good Investment? Here’s the Truth

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Since CD rates have been super high this year, a lot of people have opened CDs to take advantage. And even as CD rates start to fall, they can still be a good place to put your money under the right circumstances.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. Unlike a savings account, CDs guarantee you a certain return on your deposit. If you’re trying to meet a specific goal, knowing exactly how much interest you stand to earn is helpful.But you should also know that CDs may not be as wonderful as you might think they are. In fact, in the long run, CDs are far from the best place to put your money.The problem with CDsCDs have two main problems you should know about. And one is a much larger issue than the other.First, if you withdraw your money from a CD before it matures, you’ll generally be hit with a penalty from your bank. If you had your money in a savings account instead, you can withdraw money whenever you want.But the even bigger issue with CDs is that over time, the returns you get might pale in comparison to a stock portfolio. And that could spell the difference between meeting your long-term financial goals or falling short.Over the past 50 years, the S&P 500’s average annual return has been 10%. That accounts for years when stock prices soared and years when the market did poorly.Meanwhile, the best CD rates we’ve seen in decades have been recent rates around 5%. But that’s clearly nowhere close to 10% on your money. And those 5% rates are also far from the norm. So over time, choosing CDs could come back to bite you.Think about how much you stand to loseLet’s run some numbers to show what sticking with CDs over the long run might do for your finances vs. investing in stocks. Imagine you have $10,000 to invest over the next 30 years.If you put it into a stock portfolio that gives you a 10% annual return, you’ll end up with about $175,000.If you put it into a series of CDs that pay you 3% a year (which is a more realistic and even somewhat generous estimate), you’ll end up with about $24,000.All told, putting money into CDs could cost you $150,000 over the long run. If you’d rather set yourself up with higher returns, click here to learn about the best brokerage accounts and start investing your money today.Of course, if you’re only looking to park your cash on a short-term basis, then a CD is a better bet. To be successful as a stock market investor, you need to give yourself many years to ride out market fluctuations.If you have cash earmarked for a goal that’s a year or two away, open a CD at an FDIC-insured bank so your deposit is protected from losses and you’re able to earn more interest than what a savings account will pay. But for far-off goals, stock investing is a better bet. And if you stick to CDs, you may find that it stunts your financial growth in a very dangerous way.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Since CD rates have been super high this year, a lot of people have opened CDs to take advantage. And even as CD rates start to fall, they can still be a good place to put your money under the right circumstances.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Unlike a savings account, CDs guarantee you a certain return on your deposit. If you’re trying to meet a specific goal, knowing exactly how much interest you stand to earn is helpful.

But you should also know that CDs may not be as wonderful as you might think they are. In fact, in the long run, CDs are far from the best place to put your money.

The problem with CDs

CDs have two main problems you should know about. And one is a much larger issue than the other.

First, if you withdraw your money from a CD before it matures, you’ll generally be hit with a penalty from your bank. If you had your money in a savings account instead, you can withdraw money whenever you want.

But the even bigger issue with CDs is that over time, the returns you get might pale in comparison to a stock portfolio. And that could spell the difference between meeting your long-term financial goals or falling short.

Over the past 50 years, the S&P 500’s average annual return has been 10%. That accounts for years when stock prices soared and years when the market did poorly.

Meanwhile, the best CD rates we’ve seen in decades have been recent rates around 5%. But that’s clearly nowhere close to 10% on your money. And those 5% rates are also far from the norm. So over time, choosing CDs could come back to bite you.

Think about how much you stand to lose

Let’s run some numbers to show what sticking with CDs over the long run might do for your finances vs. investing in stocks. Imagine you have $10,000 to invest over the next 30 years.

If you put it into a stock portfolio that gives you a 10% annual return, you’ll end up with about $175,000.If you put it into a series of CDs that pay you 3% a year (which is a more realistic and even somewhat generous estimate), you’ll end up with about $24,000.

All told, putting money into CDs could cost you $150,000 over the long run. If you’d rather set yourself up with higher returns, click here to learn about the best brokerage accounts and start investing your money today.

Of course, if you’re only looking to park your cash on a short-term basis, then a CD is a better bet. To be successful as a stock market investor, you need to give yourself many years to ride out market fluctuations.

If you have cash earmarked for a goal that’s a year or two away, open a CD at an FDIC-insured bank so your deposit is protected from losses and you’re able to earn more interest than what a savings account will pay. But for far-off goals, stock investing is a better bet. And if you stick to CDs, you may find that it stunts your financial growth in a very dangerous way.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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